Swamped?

This story appears in the January 1998 issue of Startups. Subscribe »

For more than 13 years, Idora Silver has had secretaries, administrative assistants, bookkeepers, marketing specialists and accountants work for her--all without hiring a single employee. Since she started Idora Silver & Associates in 1985, her Reno, Nevada, professional-liability consulting firm, Silver has taken advantage of a trend now sweeping the business world.

"The start-up business is a tailor-made environment for taking advantage of temporary help," says Rolf Kleiner, senior vice president and general manager of Kelly Scientific Resources, a division of Kelly Services Inc., an international temporary-staffing service based in Troy, Michigan. "By using temporary staffing, the small-business owner can get highly competent assistance for a short period of time and a reasonable amount of money."

For Silver, being able to hire experts on a short-term basis has helped her grow her business. "Getting help from consultants, such as accountants, marketing experts and attorneys, broadens my dimensions and benefits me and my clients," she says.

Using temporary services is also a great way for small businesses to complete large projects they can't do themselves, says Debbie Neely, operations manager for East Bay Kelly Services Inc. in Pleasanton, California. "By calling a temporary agency," she says, "the small-business owner can get help for a day or several weeks."

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Julie Bawden Davis is a freelance writer in Orange, California.

Outsourcing Vs. Temporary Help

There are two main ways to get short-term help for your business. Outsourcing generally means hiring an independent consultant to perform certain services, while hiring temporary help refers to acquiring a short-term employee through a personnel service.

Independent consultants' rates may be lower than agencies would charge you for the same assistance. But going through an agency saves you the time and expense of locating temporary help. When you hire through an agency, you pay the agency directly for all services and avoid other expenses and tax worries.

"Hiring temporary help through an agency frees me from doing bookkeeping, payroll and employee taxes," says Jeff Auerbach, president of Gaithersburg, Maryland-based Replicon Inc., a biotechnology company involved in DNA diagnostics, who hired a scientific researcher through Kelly Services. "Writing a single check simplifies things and frees me to concentrate on the business."

Hiring consultants, on the other hand, can be a more complicated matter. "When you hire outside consultants, you must have them fill out a W-9, which will tell you if they're corporations or unincorporated businesses," says Dave Stevens, a CPA in Santa Fe Springs, California. "If they're unincorporated, you must issue them a 1099 at the end of the year if you've paid them more than $600 for that year."

It's also important the person you hire as an independent consultant is not actually acting as an employee, which would make you liable for taxes.

"There are certain criteria outside consultants must meet in order to be considered independent contractors by the government," says Stevens. "If you're audited and challenged and you lose, and people you paid as independent contractors are actually deemed employees, you may have to pay all employment-related taxes you should have withheld and submitted to federal and state taxing agencies, plus the employer's share of any other taxes due. This amount could run as high as 40 percent of what you paid them, plus penalties and interest."

The IRS has a 19-question checklist called "Employer's Supplemental Tax Guide" to help you determine whether a person is an independent contractor or an employee. The checklist can be downloaded from the IRS' Web site (http://www.irs.ustreas.gov).

Finding Good Temporary Help

Whether you use a temporary agency or an outside consultant, there are a few things to keep in mind to find high-quality short-term help.

"Word of mouth is probably the best way to find a consultant who meets your needs," says Silver. "When you're on the phone with business consultants and friends, ask who they use for the service you're looking for."

Once you find a consultant, make sure to check the person's background thoroughly. "Ask for references, and don't choose people just because they're nice," says Silver. "Consider their work first and foremost."

To choose good temporary help, you must first find a reputable agency. Make sure the company is accredited and belongs to the National Association of Temporary and Staffing Services, says Linda Haneborg, vice president of marketing and public relations for Express Personnel Services, an international staffing firm based in Oklahoma City. "Also, ask for references from other small-business owners who have used the service."

Another thing to consider is the type of recruiting the temporary firm does, which will indicate how carefully they select people. Are their potential employees thoroughly screened, tested and interviewed? Do the firm's employees usually complete assignments? Frequent turnover could indicate poor matching of qualifications to jobs.

Also make certain the agency is paying its employees a fair wage, warns Francis Dinha, president of NewCom Technologies Inc., a software and hardware engineering company in Pleasanton, California. He started the company alone last year and has since grown to eight employees, most of whom he hired first as temporary employees.

"If the agency isn't paying the employees a fair wage, they'll probably be junior-level people who aren't qualified enough," Dinha says.

To help a temporary agency find a good match for your business needs, there is a variety of information you should provide before the search begins.

• Define your needs. "Are you looking for a receptionist to just answer the phones, or is it important that he or she also have computer skills?" says Neely. "Do you have a specific type of phone system? Will the employee need knowledge of your industry?"

• Approximately how long will you need the employee? Wanting an employee who is doing well to stay on is OK, but some workers are only interested in short-term assignments and will want to leave. State your time needs up front, when possible.

• Provide a detailed job description. What time must the person report to work and what are the hours? Will the person be dealing directly with the public, or is this a behind-the-scenes job?

• Be realistic. "Consider the input you're able to provide the employee," says Auerbach. "If you're going to be out on the road a lot and not able to give the person much guidance, tell the agency so they can find a self-starter with initiative."

What You Can Outsource

The range of assistance the small-business owner can get from temporary help or outside consultants is far-reaching. Here are some examples:

• Accounting

• Data entry

• Packaging and mailing

• Shipping and receiving

• Mass mailings

• General office support

• Marketing

• Assembly of machines

• Telemarketing

• Customer service

• Legal assistance

• Research assistance

• Proofreading and editing

• Typing, dictaphone work and transcription

• Sorting, pricing and inventory

Contact Sources

Dave Stevens, CPA, 12016 E. Telegraph Rd., #201, Santa Fe Springs, CA 90670, (562) 946-8484

East Bay Kelly Services Inc., 5990 Stoneridge Dr., #106, Pleasanton, CA 94588, (510) 463-3620

Express Personnel Services, 6300 N.W. Expwy., Oklahoma City, OK 73132, (800) 635-1608

Idora Silver & Associates, (800) 682-2929, fax: (702) 829-0606

International Data Corp., (508) 935-4550, http://www.idc.com

Kelly Scientific Resources, Kelly Services Inc., 999 W. Big Beaver Rd., Troy, MI 48084, (800) KELLY-62

National Association of Temporary andStaffing Services, 119 S. Saint Asaph St., Alexandria, VA 22314, http://www.natss.org

NewCom Technologies Inc., 5990 Stoneridge Dr., #116, Pleasanton, CA 94588, (510) 737-1530

Replicon Inc., 13109 Jasmine Hill Terrace, Rockville, MD 20850, (301) 294-0184